Sweden's Lundin Energy will cut its spending plans after a smaller-than-expected rise in first-quarter profit, the partner in Norway's Johan Sverdrup oilfield said on Thursday.
Its earnings before interest and tax (EBIT) rose to $404 million from $261 million a year earlier but lagged the $442 million expected by analysts, Refinitiv Eikon data showed.
Sales volumes rose as Sverdrup achieved production of 470,000 barrels per day in April, a month sooner than forecast by operator Equinor, but prices fell, Lundin said in a statement.
It increased its 2020 production guidance to 160,000-170,000 barrels of oil equivalents per day (boepd), citing the faster ramp-up at Sverdrup, Western Europe's biggest oilfield by output.
As a result, it lowered its operating cost guidance to $2.80 per barrel from $3.40.
Its output guidance was also buoyed by postponed maintenance at the Edvard Grieg and Alvheim oilfields.
It said its guidance did not take into account output cuts announced by the Norwegian government on Wednesday as part of global efforts to support crude prices and curb oversupply.
Lundin said it would advise the market on the impact of those cuts within two weeks. The government said the cuts, which would amount to 250,000 barrels per day in June, would be fairly distributed among fields and companies.
SPENDING CUTS
The company said it would cut its 2020 spending by $300 million versus a previous $170 million and against an original plan of $1.31 billion and consider further reductions if low oil prices persist.
"As we head into the second quarter we will continue to apply very strict capital discipline across the company, to preserve the liquidity position and provide financial flexibility...," CEO Alex Schneiter said.
The company said its subsea Solveig Phase 1 development startup would be delayed from the first to the third quarter of 2021 from the first quarter and extended well tests at its Rolvsnes project deferred for a year to the second quarter of 2022.
Those deferrals will lower Lundin's 2020 capital spending by $185 million.
It will also cut its exploration program to five wells from originally planned 10 wells, with four wells being postponed until the next year.
Lundin said on March 23 it would cut its dividend for 2019 by 44% to $1 per share or $284 million, and said on Thursday it didn't plan to cut it further this year.
(Editing by Gwladys Fouche and Jason Neely)